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Spatial Interactions in Hedonic Pricing Models: The Urban Housing Market of Aveiro, Portugal

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  • Arnab Bhattacharjee
  • Eduardo Anselmo de Castro
  • João Lourenço Marques

Abstract

Spatial heterogeneity, spatial dependence and spatial scale constitute key features of spatial analysis of housing markets. However, the common practice of modelling spatial dependence as being generated by spatial interactions through a known spatial weights matrix is often not satisfactory. While existing estimators of spatial weights matrices are based on repeat sales or panel data, this paper takes this approach to a cross-section setting. Specifically, based on an a priori definition of housing submarkets and the assumption of a multifactor model, we develop maximum likelihood methodology to estimate hedonic models that facilitate understanding of both spatial heterogeneity and spatial interactions. The methodology, based on statistical orthogonal factor analysis, is applied to the urban housing market of Aveiro, Portugal at two different spatial scales.

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File URL: http://www.dundee.ac.uk/media/dundeewebsite/economicstudies/documents/discussion/DDPE_253.pdf
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Bibliographic Info

Paper provided by Economic Studies, University of Dundee in its series Dundee Discussion Papers in Economics with number 253.

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Length: 43 pages
Date of creation: Jun 2011
Date of revision:
Handle: RePEc:dun:dpaper:253

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Keywords: Spatial econometrics; Spatial heterogeneity; Spatial dependence; Spatial scale; Hedonic pricing; Statistical factor analysis; Spatial weights matrix;

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  1. Anselin, Luc, 2002. "Under the hood : Issues in the specification and interpretation of spatial regression models," Agricultural Economics, Blackwell, vol. 27(3), pages 247-267, November.
  2. Arnab Bhattacharjee & Sean Holly, 2013. "Understanding Interactions in Social Networks and Committees," Spatial Economic Analysis, Taylor & Francis Journals, vol. 8(1), pages 23-53, March.
  3. Richard Blundell & Xiaohong Chen & Dennis Kristensen, 2007. "Semi-Nonparametric IV Estimation of Shape-Invariant Engel Curves," Econometrica, Econometric Society, vol. 75(6), pages 1613-1669, November.
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  6. Stephen Malpezzi, . "Hedonic Pricing Models: A Selective and Applied Review," Wisconsin-Madison CULER working papers 02-05, University of Wisconsin Center for Urban Land Economic Research.
  7. Raffaella Giacomini & Clive W.J. Granger, 2002. "Aggregation of Space-Time Processes," Boston College Working Papers in Economics 582, Boston College Department of Economics.
  8. Arnab Bhattacharjee & Chris Jensen-Butler, 2005. "Estimation of Spatial Weights Matrix in a Spatial Error Model, with an Application to Diffusion in Housing Demand," CRIEFF Discussion Papers 0519, Centre for Research into Industry, Enterprise, Finance and the Firm.
  9. Donald W.K. Andrews, 2004. "Cross-section Regression with Common Shocks," Yale School of Management Working Papers ysm401, Yale School of Management.
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  14. Sudip Chattopadhyay, 1999. "Estimating the Demand for Air Quality: New Evidence Based on the Chicago Housing Market," Land Economics, University of Wisconsin Press, vol. 75(1), pages 22-38.
  15. Arnab Bhattacharjee & Sean Holly, 2010. "Structural Interactions in Spatial Panels," CDMA Working Paper Series 201003, Centre for Dynamic Macroeconomic Analysis.
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  20. Bourassa, Steven C. & Hamelink, Foort & Hoesli, Martin & MacGregor, Bryan D., 1999. "Defining Housing Submarkets," Journal of Housing Economics, Elsevier, vol. 8(2), pages 160-183, June.
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  22. Luc Anselin & Nancy Lozano-Gracia & Uwe Deichmann & Somik Lall, 2010. "Valuing Access to Water—A Spatial Hedonic Approach, with an Application to Bangalore, India," Spatial Economic Analysis, Taylor & Francis Journals, vol. 5(2), pages 161-179.
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Cited by:
  1. Arnab Bhattacharjee & Eduardo Castro & Taps Maiti & João Marques, 2014. "Endogenous spatial structure and delineation of submarkets: A new framework with application to housing markets," SEEC Discussion Papers 1403, Spatial Economics and Econometrics Centre, Heriot Watt University.
  2. Joao Lourenço Marques & Eduardo Castro & Arnab Bhattacharjee & Paulo Batista, 2012. "SPATIAL HETEROGENEITY ACROSS SUBMARKETS: Housing submarket in an urban area of Portugal," ERSA conference papers ersa12p1111, European Regional Science Association.
  3. Bhattacharjee, Arnab & Jensen-Butler, Chris, 2013. "Estimation of the spatial weights matrix under structural constraints," Regional Science and Urban Economics, Elsevier, vol. 43(4), pages 617-634.
  4. Arnab Bhattacharjee & Taps Maiti & Dennis Petrie, 2014. "Spatial structures of health outcomes and health behaviours in Scotland: Evidence from the Scottish Health Survey," SEEC Discussion Papers 1401, Spatial Economics and Econometrics Centre, Heriot Watt University.

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